EB-5 investors take advantage of last-minute window to get in under old rules
Foreign investors hoping for a green card under the controversial EB-5 visa program have a last-minute window to apply, before Congress likely institutes tighter restrictions in December.
The EB-5 program grants temporary legal status and a path to U.S. citizenship for foreign nationals who invest at least $500,000 in a U.S. business that creates at least 10 U.S. jobs.
The program was due to sunset Sept. 30. But a Congressional resolution has kept the federal government running through December 11.
Now the rush is on. Professionals who work with EB-5 investors say they're seeing an uptick in interest lately.
“We’d usually receive a few phone calls a day," said Howard Ting, vice-president of YK America, an EB-5 investment firm and developer in El Monte. "Now, we’re getting probably close to a dozen phone calls.”
He said investors have called to ask if they can get in under the current rules, which are looser than what some lawmakers have proposed as the program comes up for renewal.
"They want to make sure: Are they too late? Are they still okay?" Ting said.
For now at least, wealthier would-be immigrants have a shot at a green card for relatively little: They may invest either $1 million or $500,000; the lower amount applies so long as they're investing in what's called a "Targeted Employment Area," or TEA.
In recent years, San Gabriel Valley communities like El Monte and San Gabriel have seen a proliferation of EB-5 related development. The program became especially popular during and after the Great Recession, as traditional financing for developers became harder to come by. Last year the U.S. granted 10,000 EB-5 visas, the majority to Chinese investors and their families.
Come December, the rules could change. A Senate bill that would reauthorize the program proposes raising investment amounts from $500,000 to $800,000, and from $1 million to $1.2 million. Some lawmakers have also suggested tightening loopholes to guard against fraud, and to stop the gerrymandering of "Targeted Employment Areas," which some say investors do to pay the minimum amount.
Los Angeles immigration attorney Robert Lee works with investors from China and Vietnam. He said he's for the proposed changes.
"I don't think the program is going to go away, but I certainly think they are going to change it, and I certainly hope that they do," Lee said. "There are a lot of things they can do to fix it to make it more secure for the investor."
There have been several instances of EB-5 investors being defrauded. Earlier this year, the federal government filed a complaint against an EB-5 investment firm called Luca International, LLC; the U.S. Securities and Exchange Commission alleges that money collected for oil exploration instead went toward company executives' personal expenses.
Firms authorized by the U.S. government to collect EB-5 investors' funds are known as "regional centers," and 34 of these have been terminated by the federal government. A recent audit released by the U.S. Government Accountability Office noted 59 open investigations tied to EB-5.
On the flip side, however, Lee said investors want to get in under the current rules because it's more financially feasible for them. While he doesn't think the price hike is steep enough to deter most, it would make it harder for applicants to wire funds to United States.
He said some countries, like Vietnam, have extremely low limits for money wired abroad. China sets higher limits, but investors still typically have relatives and friends wire money for them to get around wiring restrictions, Lee said.
With this in mind, he said, while some would-be investors were sitting on the fence before, "now they’re getting ready to actively file," Lee said.
Applying for an EB-5 is a complicated process that can take months. Immigration attorney Mahsa Aliaskari said the extension has most helped those who started applying too late to get in by the Sept. 30 deadline.
"They're getting an opportunity that they thought was lost to them," she said.